Guy S. Ortmann, CMT | Dec 01, 2021 09:41AM ET
The major equity indexes closed notably lower Tuesday with broadly negative internals on the NYSE and NASDAQ with heavy trading volume. All closed at or near their lows of the day with several of the charts sinking below near-term support levels.
Yet while the charts look like a down staircase with most in negative trends while market breadth continued to deteriorate, there are some reasons to be a bit more encouraged, in our opinion.
The McClellan 1-Day OB/OS Oscillators are now extremely oversold while corporate insiders continue to increase their buying activity. As such, while the charts and breadth are negative, we are seeing some levels on the data dashboard that we believe warrant a change in our near-term macro-outlook for equities from “neutral” to “neutral/positive”.
On the charts, the major equity indexes closed notably lower yesterday with very negative internals on the NYSE and NASDAQ on heavy volume as all closed at or near their lows of the day.
We believe it important that the McClellan 1-Day OB/OS Oscillators are now very oversold and at levels that have been followed by good reflex rallies 3 times over the past year (All Exchange: -110.01 NYSE: -116.4 NASDAQ: -105.15). In fact, the only time they were more oversold was during the original COVID outbreak in March of 2020.
In conclusion, while the charts and breadth look awful, the OB/OS levels combined with active insider buying and oversold stochastic levels are significant enough to alter our near-term macro-outlook for equities from “neutral” to “neutral/positive”.
SPX: 4,538/4,654 DJI: 34,448/35,705 COMPQX: 15,327/15,798 NDX: 15,653/16,200
DJT: 15,726/16,529 MID: 2,702/2,811 RTY: 2,180/2,280 VALUA: 9,390/9,703
RTY chart courtesy of Bloomberg; all other charts courtesy of Worden
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